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Archive for March, 2009

Compare mortgage refinance rates in your area

Tuesday, March 31st, 2009

Thanks to action from the Federal Reserve in the last few weeks mortgage rates are definitely on the decline across the country. In fact, mortgage rates have just recently hit their lowest level in 52 years according to a recent survey. The long-term fixed mortgage rates are falling particularly fast right now. What does mean to you? Well, if you are a good candidate for refinancing a mortgage on your home then now is a good time to at least consider it as a possibility.

Bankrate has a terrific mortgage refinance calculator that allows you to plug in all the pertinent rates and information from your mortgage and then plug in current interest rates and see whether it is worth it for you to refinance. The calculator is designed to show you just how much you would save by refinancing your mortgage in the current environment. Obviously in some cases you wouldn’t save anything, but in others you can save a great deal.

Bankrate also has a thorough section which allows you to compare the best mortgage refinance rates in your area.  You are able to search by state or zip code and look for the best possible interest rates to refinance your home. You are looking for the lowest mortgage refinance rate possible, while still staying in a reasonable payment zone for you and your family’s income. Remember not to overstep your boundaries and try to payoff too much because that will actually force you deeper into debt in the long run.

While looking on a site like Bankrate is extremely helpful, it is also imperative that consumers also be proactive and call or go to their local banks and speak to someone in the mortgage department. Quite often they will be able to help you find an even better rate than is advertised if you go in and sit down and explain your overall situation. Shop around and don’t feel pressured, but rather just do what is best for you and your wallet.

Closed mutual funds are opening up again

Tuesday, March 31st, 2009

Have you ever tried to get into high profile mutual fund and found out that the fund is closed for new investors? All such funds are opening up again for new investors because of huge cash outflow from those funds. Oakmark Equity & Income, Sequoia like funds opened the door for new investors to get more money in. If you had eyes on some of these exclusive funds, check out whether those funds accept new investors now. The odds are in your favor!

Source: Wall Street Journal

A Cash for Clunkers Program?

Monday, March 30th, 2009

Over the past few days there have been increased discussions in Washington regarding ways to try to help out the consumer as well as aid the automakers. Today the talk heated up quite a lot as Senator Chuck Schumer of New York announced that he will push hard for a quick implementation of the program. Schumer said the program would help cash-strapped Americans replace their inefficient automobiles. The program would be designed to allow Americans to trade in automobiles that get 18 miles to the gallon or less for a more efficient automobile. The real kicker though is the fact that the buyer would be given a credit of up to $4,500 when they trade in their clunker and could then use that money to buy a more efficient automobile.

In President Obama’s remarks about the automobile industry in general today, he remarked that he would be in favor of a move to give Americans credit for those clunkers. Clearly the program is gaining some major steam and it may well be implemented quicker than anyone ever thought. The debacles that are General Motors and Chrysler right now make the the argument a stronger one, since similar programs have helped bring car sales up by 20% or so in Germany.  

What kind of cars would meet the new bills provisions and allow you to trade in your automobile for a large credit? Is your car on the list? A list of automobiles expected to be on the list is here.

The thought is that this program could do a lot of good for the economy if it is done correctly. The positive is that such a program would also serve to make America more energy efficient and more green, which is always a major positive. If the cash for clunkers program is indeed implemented, you’d be wise to take advantage of the perks of the program! Stay tuned!

Out-of-network Insurance Scam

Saturday, March 28th, 2009

When patients go out of their health plan network, their plan is supposed to pay 70 percent of the doctor’s visit cost. It appears that insurance companies pay 70 percent of what it determines is the “usual, customary and reasonable” cost for the procedure or doctor’s visit in question. Insurance companies determine that cost themselves, and there’s no proper oversight of how they do it.

United Health Group is in hot water in this issue. It was allegedly manipulating claims data so that the “usual, customary and reasonable” costs they used were lower than they should have been, leaving patients to pay more. Sen. Jay Rockefeller, chairman of the Senate Commerce, Science and Transportation Committee and New York Attorney General Andrew Cuomo are on the case.

I wonder how long these insurance companies were cheating the patients if the charges are true.

Source: Senators examining insurance companies’ out-of-network practices

Minimize credit card debt risk by being picky

Friday, March 27th, 2009

So many Americans have trouble with credit card debt and the single largest reason for credit card debt is most often thought to be the fact that most Americans have four or more credit cards now. Those who are deep in doubt are often found to be those who have signed up for far too many credit cards in the first place. Simply put, it is difficult to keep track of your spending when there are so many different cards to choose from. The most important lesson that should be learned is the first and largest step to minimizing the risk of credit card debt is being very picky about which credit cards you sign up for.

It is important to point out that I am not saying credit cards are altogether bad, rather it is a good idea to have a great credit card or two that have terrific rewards programs and help you earn money back for your purchases. The problem is that there are so many different credit card offers out there that sound so attractive at the time that it can be hard to remember that you shouldn’t sign up for so many cards.

Marketers want to make it difficult to reject their credit card pitch, which is why you’ll often “save” so much if you sign-up for their card. While you may be able to get 10 or 20% off your initial purchase by constantly signing up for each of your favorite stores credit cards, you are taking the risk of losing much more in the long run.

Sit down and evaluate some of the best credit card options you have based on your spending habits and what kind of rewards you find the most attractive. Once you have done this you should be able to limit your credit card debt risk by having no more than two credit cards in that wallet or purse you carry with you every day.

Unemployment Rate Goes Up Again

Thursday, March 26th, 2009

Few days ago I wrote that unemployment is still the same. It is not the same, it’s getting worse. For the 10th week in a row, the number of people receiving jobless benefits grew. It now stands at nearly 5.6 million, an indication that the labor market is still grim. New claims for unemployment benefits rose again as well, to a seasonally adjusted 652,000, up from 644,000 the week before. More on this story here.

If we don’t see turnaround in unemployment, the economy is not going to go anywhere but down. As we said before, if you have a job consider yourself lucky and do everything possible to keep the job. Unemployment situation gives us the warning that we should not get carried away with the recent rally in the stock market. We are not out of the woods yet.

Make your tax refund go further

Thursday, March 26th, 2009

It’s just about that time of the year again, tax filing deadlines are right around the corner and you need to make sure you are prepared. Many people are still in the process of getting their taxes completed and ready to be sent federally as well as on the state level. If you are in the process of calculating your taxes, H&R Block has some great tax refund calculators that will help you figure out how much you are likely to get back this coming year. Also, the IRS has a great frequently asked questions section where they answer many of the questions you are likely having while you are trying to complete your taxes.

If you are fortunate enough to receive a tax refund this year you need to be ready to make the most of that refund. There are so many Americans who receive that refund and think of that money as some kind of gift that must be used up right away, which is not at all the way it should be looked at. If you receive a tax refund it isn’t as if you have won the lottery or made out like a bandit, but rather it is simply another method of trying to grow your savings account through the rough economic times. Think of it as a boost to your ability to save money for the necessary expenses that are difficult to pay each and every month.

Take a different perspective when you receive your tax refund check this year. Rather than trying to figure out how you will spend the tax refund, decide how you will invest that refund in safe cash equivalent assets that can gain you some interest over time and help you be in a better position financially. Make every penny of that tax refund work hard for you and your family!

Email Scam that Promises Stimulus Money

Thursday, March 26th, 2009

If you receive email from IRS with the instructions about how to receive stimulus payments, most likely that email is a phishing email. Wall Street Journal reports that scammers are sending such emails to steal your credit card information. These emails display photos of President Obama and Vice President Biden and claim to offer people their portion of stimulus package. As in all other phishing emails, if you click the link in the email you will be taken to fake website where your identity and/or credit card information will be stolen.

Federal Trade Commission says that the IRS never asks for personal information via email. If you receive any such email do not click any links in it. Forward such emails to phishing@irs.gov so that IRS can track the scammers.

How to Save Money for College

Wednesday, March 25th, 2009

With college fees at an all time high, many students find themselves struggling to pay bills and meet deadlines. Some students take a semester off so that they can work and earn enough money to pay their bills. Many students even find themselves at risk of being cut off from college. The question is how one can save for college? What resources can we make use of?

Tuition, room and board for a 4-year degree course would cost anywhere from $40,000 to $150,000 per student depends on the course. Parents need to save for their children’s college expenses from very early on. Section 529 investment plan is a good choice to start with. Parents can also use Education Savings Accounts to save for college expenses. Contributions to Education Savings Account are not deductible, but amounts deposited in the account grow tax free until distributed.  The beneficiary will not owe tax on the distributions if they are less than a beneficiary’s qualified education expenses at an eligible institution.

If your savings are not enough to cover the college expenses, there are a number of scholarships and grants meant to help eligible students meet their college expenses. So, how do you find the right scholarship for yourself? The best resource is the internet of course. It would be a good idea to check out government sponsored scholarships first. The government allots billions of dollars in scholarship aids each year so, trying for a government scholarship will be worth it. Web sites like students.gov, edu.gov and fafsa.gov will provide you with information on government sponsored college grants and scholarships. You can get an idea of the criteria for student aid and the expenses covered. Students.gov even has a detailed college planning course. FAFSA is the Federal Application for student aid. You can apply for FAFSA midterm. Many students who were previously supported by income from their family find themselves stranded when family members suffer the brunt of the recession and lay-offs. Federal aid is of great advantage for such students whose families cannot contribute as much as they used to.

Collegeboard.com, fastweb.com and scholarships.com are other websites with dedicated resources for those pursuing scholarships. Many of the scholarships on offer have rolling deadlines. You can easily apply for these scholarships online. A point to be noted while searching for scholarships on the internet is that many sites request personal information from you such as age, address, e-mail, phone number and so on. It would be wise to go through the privacy policy of these web sites so that you know who has access to your details. In this way, you can prevent your mailbox from being flooded with spam and junk mail.

Sometimes scholarships and grants are simply not enough to cover tuition costs and other expenses. In that case, students can go in for education loans. There are three categories of education loans:

As in the case of scholarships, government loans are the best option as far as student loans are concerned. These loans can be obtained at a minimal interest rate making it easier for parents and students to pay them back. Moreover, government loans also have a grace period which permits students to get a job before starting repayment. With government loans, you also have the option of “loan forgiveness” wherein your loans are written of in exchange for volunteer work, military service or public service.

Many private banks also offer attractive rates on their loans. This is a fine option for those with good credit. However, you may not be able to enjoy the privilege of grace period.

If you are looking for a good student loan, search the internet for a list of trusted lenders from both the private and government sector. Sites like simpletuition.com and studentloanmonkey.com are valuable resources for those hunting for student loans. You can compare the loans cited in different sites and settle for one that is best for you. Many websites have calculators that you can use to calculate monthly loan payments and so on.

Colleges also go to great lengths to keep students enrolled and prevent them from dropping out due to financial issues. Many schools provide emergency loans and grants to students. If your college has such a provision, be sure to check it out.

If you plan to apply for student loan, do your homework well in advance. Start researching early so that you know what options you have. Banks and educational institutions require a number of supporting documents and letters of recommendation from faculty before they can sanction your loan. You can discuss the requirements and other details with education counselors in your college or university. They should be able to help you choose a good student loan plan. They can also guide you on how to apply for scholarships and whom to approach.

The resources to help meet your college expenses are all out there. You just need to know where to start. With the right approach, you will be able to secure a grant or loan to help you pay those mounting bills.

Related Link: Saving For College

What are reasonable mutual fund expenses?

Wednesday, March 25th, 2009

As an investor in mutual funds you should certainly be considering how much you are paying in expenses. If you have read this blog before you know that no one should be paying for any loaded funds, so we’ll assume you have a no-load mutual fund. The question then becomes, what is a reasonable expense ratio for mutual funds?

There is no single correct answer for a reasonable expense ratio for mutual funds, since funds in different parts of the market tend to have different expense ratios. The best way to gauge how expensive a mutual fund is can often be to compare it to its peers.

The good news is that over the past few years the average mutual fund expense ratio has actually dropped quite a bit. Last year the average expense ratio was just 1.19% as compared to 1.40% in 2003. The bad news is that many mutual funds are now speaking of the need to raise their expense ratios again.

There are a couple reasons for the drop in mutual fund fees in the last few years. The first one is that the overall stock market has suffered a great amount, which generally leads to lower fund expenses. The second is the increase in the amount of index funds, which are far cheaper than other funds that are actively managed.

I suggest investors use Morningstar to look at a particular mutual fund and compare it to all of its peers. There simply is no reason for any one fund to have expense ratios far higher than a similar fund. You do need to understand that funds such as international funds, emerging market funds, and small cap funds tend to have higher expense ratios. The lower expense ratios are typically found in index funds, large cap value funds, and passively managed funds.

Comparing mutual fund expenses is a great idea, just make sure you are comparing apples to apples and not apples to oranges!

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